Chrysler 2011 Annual Report Download - page 222

221
Consolidated
Financial Statements
at 31 December 2011
Instead, when it is probable that an outflow of resources embodying economic benefits will be required to settle obligations and this amount can be reliably
estimated, the Group recognises specific provisions for this purpose (see Note 27).
Furthermore, in connection with significant asset divestitures carried out in prior years, the Group provided indemnities to purchasers with the maximum
amount of potential liability under these contracts generally capped at a percentage of the purchase price. These liabilities refer principally to potential
liabilities arising from possible breaches of representations and warranties provided in the contracts and, in certain instances, environmental or tax matters,
generally for a limited period of time. At 31 December 2011, potential obligations with respect to these indemnities were approximately €430 million
(approximately €859 million at 31 December 2010). Against these obligations, at 31 December 2011 provisions of €66 million (€60 million 31 December
2010) have been made which are classified as Other provisions. The Group has provided certain other indemnifications that do not limit potential payment;
it is not possible to estimate a maximum amount of potential future payments that could result from claims made under these indemnities.
33. Segment reporting
As reported on 28 July 2011, as a result of the acquisition of majority ownership of Chrysler Group and consistent with the objective of enhancing the
operational integration of Fiat S.p.A. and Chrysler Group, Fiat has announced significant changes to its organisation effective beginning of September 2011.
The effects of these organisational changes on the composition of the Fiat Group’s operating segments will be reflected in its IFRS 8 segment reporting
from the first quarter of 2012, once all required economic and financial information has been determined. Changes in information by sector have therefore
not been reflected in this note.
The operating segments through which the Group carries out its activities are based on the information referring to 2011 used by the Group’s Chief
Executive Officer to make strategic decisions.
In accordance with IFRS 8 – Operating Segments, as a result of the Demerger which took place on 1 January 2011 and the acquisition of the control of
Chrysler on 24 May 2011, the Group’s disclosures by operating segment have been revised to reflect the internal information used by the Group’s Chief
Executive Officer to make strategic decisions. In particular, following the inclusion of Chrysler in the scope of consolidation of the Fiat Group, the operating
segment representing Chrysler has been added to the operating segments of the Continuing Operations of the Fiat Group (Fiat Group Automobiles,
Maserati, Ferrari, Fiat Powertrain, Magneti Marelli, Teksid, and Comau).
The information used in the preparation of this Note and prepared in accordance with the accounting policies described under the paragraph Significant
Accounting Policies.
The individual operating segments included in Continuing Operations earn revenues from their ordinary production and sales activities as follows:
Fiat Group Automobiles earns its revenues from the production and sale of passenger cars and light commercial vehicles, in addition to the provision of
financial services associated with the sale of those vehicles in markets outside the European Union (mainly in Latin America). Financial services activities
within the European Union are, however, carried out through the 50/50 joint venture FGA Capital set up with the Crédit Agricole group.
Chrysler generates its revenues from the design, development, production, distribution and sale of automobiles under the Chrysler, Jeep, Dodge and
Ram brand names, and from the related parts and accessories (under the Mopar brand name). The segment’s product line consists of cars (including
SUVs and crossovers), minivans, pick-ups and medium-duty trucks.
The Maserati segment earns its revenues from the production and sale of Maserati-brand luxury sport cars.
The Ferrari segment earns its revenues from the production and sale of Ferrari-brand luxury sport cars, from managing its Formula 1 team and from
providing financial services offered in conjunction with its vehicle sales.
The Components segment (Magneti Marelli) earns its revenues from the production and sale of lighting components, engine control units, suspensions,
shock absorbers, electronic systems, and exhaust systems and from activities in the plastic moulding components and in the after-market.
The Fiat Powertrain segment earns its revenues from the production and sale of engines and transmissions for passenger and commercial vehicles.
The Metallurgical Products segment (Teksid) earns its revenues from the production and sale of cast iron components for engines, transmissions and
suspension systems, and aluminium cylinder heads.
The Production System segment (Comau) earns its revenues from the design and production of industrial automation systems and related products for
the automotive sector.